- Oil prices fell as Brent crude hit pre-war levels amid improved supply and US-Iran talks
- Brent crude dropped 1.52% to $72.4, WTI fell 1.43% to $69.3 per barrel
- Increased tanker activity in the Strait of Hormuz signals easing regional tensions
Oil prices extended their decline on Thursday, with Brent crude falling to its pre-war levels as improving supply conditions and optimism over a potential US-Iran peace agreement continued to weigh on the market.
Brent crude dropped more than 1.52% to around $72.4 a barrel, while US benchmark West Texas Intermediate (WTI) fell 1.43% to about $69.3 a barrel. The latest decline follows a sharp 4% drop in the previous session, leaving Brent at its closing price before the US-Iran conflict began.
The retreat comes as traders increasingly unwind the geopolitical risk premium that had driven oil prices sharply higher earlier this year. While negotiations between Washington and Tehran remain complex, both sides have signalled progress following their initial round of talks, raising hopes that the conflict could move towards a lasting resolution.
One visible sign of easing tensions has been the increase in oil tankers openly transiting the Strait of Hormuz with their tracking systems switched on, suggesting shipping activity is gradually returning to normal after months of disruption.
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At the same time, global crude supplies are beginning to recover. Buyers are reportedly being offered more cargoes from producers across the Middle East and Africa, easing concerns over availability that had dominated markets during the conflict.
The shift is also showing up in physical oil markets. Brent's prompt timespread — a closely watched indicator of near-term supply and demand — flipped into contango, a bearish market structure where future prices trade above spot prices. The move suggests traders are becoming less concerned about immediate supply shortages.
Additional supply could also come from Iran after the US granted a temporary waiver allowing purchases of Iranian oil that had already been loaded before sanctions relief discussions began. While financing and insurance restrictions continue to limit broader exports, the waiver is expected to add incremental barrels to the market.
Despite the easing supply concerns, analysts caution that the market is not entirely out of the woods. Much of the supply disruption during the conflict was offset by drawing down inventories, particularly in the US. Crude stockpiles at Cushing, Oklahoma — the delivery hub for WTI futures — have fallen to around 19 million barrels, below levels generally considered necessary for smooth market operations.
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